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AFP store quizzed on costly deals

MANILA, Philippines – Why did a military store, which is supposed to
sell goods at affordable prices to Armed Forces of the Philippines (AFP)
personnel, enter into P149.63-M in transactions when it could have
gotten cheaper deals?

The Commission on Audit (COA) wants to know, and is questioning the
AFP Commissary and Exchange Service (AFPCES) for purchase orders with
Puregold Junior Supermarket Inc in the first half of 2011. The
transactions amounted to P149,626,306.50, based on COA's review of the
agency's transactions.

COA said AFPCES could have bought goods, at cheaper amounts, directly from exclusive distributors or manufacturers.

This resulted in a double hit for the government because the latter
had to pay value-added tax (VAT) for the grocery items on top of the
middleman's add-on cost, according to COA.

“Since e-VAT is shifted or passed on to the buyer, the AFPCES gets
the burden of paying the additional tax passed on to Puregold from the
manufacturers, but recovers the full amount of e-VAT from the AFPCES
through the issuance of a TSAC, which the latter can use as tax credit
to the disadvantage of the government,” COA said.

The tax subsidy was supposed to allow AFPCES to provide “quality
merchandise goods and services at reasonably low prices to authorized
customers,” such as military and civilian personnel of the AFP,
retirees, widows and widowers of deceased soldiers, war veterans, and
their families.

Another problem is that AFPCES allowed even unauthorized customers,
or those who did not present official AFPCES purchase cards, to make
purchases. The merchandise on display in various AFPCES outlets, COA
added, did not bear a signage that says, “Tax subsidized by the
Philippine government. Not for resale.”

“In the absence of said markings, there is a probability that the
merchandise/goods purchased at AFPCES may be resold to other parties
thus, the objective for which the tax subsidy was granted may not be
achieved,” COA said.

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